ExpandCollapse

Well-Known Member

So, how is it that CBO and the administration can project such vastly different budget outcomes when examining the exact same set of policies? Most of the difference ($1.3 trillion) comes from the administration’s use of overly optimistic economic projections. By simply assuming an improbably high level of economic growth—along with income and profits, the administration is able to paint a much rosier picture of its budget.

For example, over the 2015–2024 period, the administration assumes the following (all compared to the CBO’s projections):

GDP will be 3 percent higher;
Incomes will be between 1 and 2 percent higher;
Profits will be 10 percent higher;
Tax revenues will be 4 percent higher; and
Interest rates will be between 7 and 9 percent lower

This is not the first time the administration has employed overly optimistic economic projections to garner support for its policies. According to an analysis by the administration’s economists back in 2009, enacting the president’s proposed stimulus package would have prevented the unemployment rate from ever rising above 7.9 percent. Despite passage of the stimulus, the unemployment rate rose to 10 percent, and even today, nearly five years after the recession officially ended, the unemployment rate remains elevated.

ExpandCollapse

Well-Known Member

For example, over the 2015–2024 period, the administration assumes the following (all compared to the CBO’s projections):

GDP will be 3 percent higher;

Click to expand...

GDP increased 2.6% in the last reported quarter. So Obama thinks GDP will grow 5.6% continuously for the next 40 quarters? C'mon!

Incomes will be between 1 and 2 percent higher;

Click to expand...

That's a possibility for many people, but unlikely to occur across the board.

Profits will be 10 percent higher;

Click to expand...

This is not going to happen. If incomes only go up 1 to 2 percent, there is no way that profits are going to increase 10%. Where are companies going to find profit margin increases? They can't increase prices if wages are only going up 1 to 2 percent.

Tax revenues will be 4 percent higher;

Click to expand...

If unemployment is dropped to 5% or so this might happen, but it's not happening if incomes only go up 1 to 2 percent.

Interest rates will be between 7 and 9 percent lower

Click to expand...

Interest rates are rock bottom right now. So, what, they're going to pay people to take out loans? Plus, the Fed has said they will gradually increase rates.

That's a possibility for many people, but unlikely to occur across the board.

Click to expand...

Only if people are willing to work two part-time jobs of 25 hours each, because employers with less than 50 employees -- and indications are that will be about three-quarters of all employers in the U.S. in the next seven years -- are not going to hire full-time anymore.

This is not going to happen. If incomes only go up 1 to 2 percent, there is no way that profits are going to increase 10%. Where are companies going to find profit margin increases? They can't increase prices if wages are only going up 1 to 2 percent.

Quick Navigation

Support us!

The management of Baptist Board works very hard to make sure the community is running the best software, best design, and all the other bells and whistles that goes into a forum our size.Your support is much appreciated!